I posted this on the TRONIX Reddit put wanted to also post this here so more Tronics and Hackathon participants could see it as well.
(If anyone would like to be an approved member on the TRON community reddit send me a DM. This will allow you to post without the needed Karma requirement. The Karma requirement is there to make sure bots don’t go crazy posting garbage. )
I want to preface this by saying this is purely speculation mixed in with things happening.
We have seen the recent USDC depeg and complications with banks like SVB, Silver bank and Credit Suisse across the world. With traditional banks not having a 1:1 reserve and instead running on a fractional reserve system has led many of the banks to become bankrupt. The government then in turn bailing them out. This is a failed system
CZ Binance Explaining Fractional Reserves Don’t Work.
Why Do We Need Stablecoins and Traditional Banks?
Stablecoins have been pivotal for increasing adoption within crypto. In this current time of transition from web2 to web3 where crypto infrastructure is not widespread and users/businesses still heavily rely on fiat, we can see stablecoin has brought in a considerable amount of liquidity into crypto.
Cryptocurrencies have a glaring issue of volatility and stablecoins attempt to bring stability to the blockchain which is essential for businesses.
You might have businesses accept payments in BTC, ETH or TRX but they are 100% switching those cryptocurrencies in the back end to a more stable asset. This is why a stable asset is essential.
Our current stablecoins that are dominant in the market are fiat-backed stablecoins. These require a bank to store the fiat in order to mint. Say a business gives the bank $100 USD then the issuer credits them 100 USDC. They can also redeem or reverse the process. This provides an easy on-off ramp for big business.
The issue arises when traditional banks, still using the fractional reserve system, go bankrupt and funds are not accessible. Then users start to sell USDC below the $1.00 value on the market because they can’t redeem to fiat causing a depeg event.
In order to create a fiat-backed stablecoin it is a necessary evil to use a bank.
Recently, BUSD has been called out on its stability and its issuer Paxos has stopped minting BUSD. Binance and CZ has turned to replacing BUSD with TUSD.
Binance Minting TUSD on TRON
Binance swapping BUSD to TUSD/USDT
0 Free Trading on TUSD
This is a big shift in focus from one of the biggest players in Crypto from BUSD to TUSD.
TUSD claims that it always has a 1:1 reserve. It works with several traditional banks and has a live reserve tracker on its website. It also issues many different stables such as GBP and the Chinese Yuan.
Tracking of reserves on their website
What Does This Have To Do With TRON?
Not only did Binance mint their newly TUSD on TRON in one of the images above but Justin Sun is related to TRUE.
In fact, TUSD gained legal tender status from Dominica along with other TRON based cryptocurrencies.
This opens up the legal framework and adoption of TUSD.
TUSD is Legal Tender in Dominica
Quite recently Justin Sun also expressed interest in creating a “Crypto Friendly” bank and Dominica is known for its Financial/Tourism industries. It would seem the perfect place to work with the Dominica bank to issue a stablecoin and a win-win for TRON, Dominica, and Crypto adoption.
Justin Sun’s interest in a “Crypto-Friendly Bank”
So How Will This Affect $TRX?
TRON currently generates a ton of revenue mainly from its cheap/fast stablecoin transfers. It is the #1 chain for USDT holding even more than Ethereum. It is a powerhouse in currency settlement and burns on average $1 million USD worth of TRX per day, mainly coming from USDT transaction fees.
With more adoption of TUSD, especially from a big player like Binance, we could see more usage of the TRON blockchain to transfer it thus increasing the burn effect of $TRX and price appreciation. TRX is currently at a 10% deflationary rate.
TRX Burning Per Day
On The Horizon.....
While TRON may lack in terms of Dapps (Currently have ongoing TRON Hackathons to help this) it is a powerhouse in the original vision of crypto which is, international currency settlement.
While you might think so they got 2 stablecoins USDT and TUSD… just over the horizon we can see both Tether and True releasing their own OffShore Chinese Yuan which happened earlier this year on TRON.
Offshore Yuan is mainly used to connect businesses in China to those outside of it. This is centered around Hong Kong which is why traditional finance called it CNH (H for Hong Kong) and CNY (China Yuan).
Tether’s Chinese Yuan on TRON
This market solely revolves around if Huobi (Crypto Exchange for which Justin is an advisor to) can acquire its licenses in Hong Kong, which they have applied for already.
This would bring even more TRON usage on a massive level.
With all these stables and a head start with country adoption, TRON could very well be the “settlement” blockchain.